What is Gift Aid?

If you’re thinking about making a charitable donation, one important way to maximize the value of your donation is by using Gift Aid. For every £1 that you donate, a charitable organization will receive an additional 25p. That’s 25% extra with every single donation!

It sounds like magic, right? Gift Aid is actually a UK tax initiative designed to spur charitable giving. It’s a way to reclaim the basic rate of tax on your gift at no additional cost. It works because charities don’t pay tax on most types of income. And, thus far, Gift Aid has been phenomenally successful in the UK. During the financial year 2014-2015, UK taxpayers donated £1.19 billion using Gift Aid.

How does it work?

Giving via Gift Aid is actually a very simple process. All you have to do is fill out a Gift Aid declaration form. This form just says that you would like to donate through Gift Aid and receive tax back on your donation. You only have to fill out this form one time – so even if you plan on giving several times during the year, you don’t have to worry about a lot of extra paperwork.

Then, every time you make a donation via Gift Aid, your donation will be processed and an extra 25% will be added to the value of the donation. This total value is then donated to the charitable organization of your choosing. So, for example, if you donate £100 via Gift Aid, your donation will be automatically increased by 25%, to £125. And that total value of £125 is then passed on to the charitable organization.

What are the limitations on using Gift Aid?

Since this is a tax-based initiative, the limitations to Gift Aid are linked to your status as a UK taxpayer. For example, you must be a UK taxpayer, and you must have paid UK income or capital gains tax during the financial year. Moreover, you must have reported personal income of more than £11,000. Of course, you can still make a charitable donation regardless of how much money you make, but unfortunately, that donation won’t be eligible for Gift Aid.

Why should I use Gift Aid?

Gift Aid is simple, easy and effective. If you would like your charitable donation to work as hard as possible, there’s something magical about seeing a £100 donation transform into a £125 donation. That extra 25% can go a long way toward improving the lives of children in the UK.

The best part about Gift Aid is that, other than filling out that initial Gift Aid declaration form, the process of making a charitable donation doesn’t change. You can manage all of your donations in one place, which makes them easier to track when figuring out your taxes. And you can still give anonymously – so even though you have to fill out a formal document, you can still choose to keep your identity private.

For charities, Gift Aid is a real gift. It’s a way of making sure that every gift lasts longer and goes further. And that has a real impact on the everyday lives of children across the UK.